Delta is Flying High

Delta (Ticker Symbol: DAL) is going to report earnings before the bell on Wednesday, kicking off the earnings season for airlines. Delta’s stock has had a great start to the year, rallying over 15% since January. This comes in the midst of Delta rising to the top of the annual U.S. airline ranking.

The study ranks the major airlines for lost baggage, complaints, on-time and delayed arrivals, and more. Delta has moved up a slot this year from number two, improving in every metric, followed by JetBlue Airlines in second and Southwest Airlines coming in third. In the first quarter of 2018, legendary investor Warren Buffett has raised his investment in Delta, purchasing over $265 million worth of stock with an average price of $49.40.

Delta’s stock has been stuck in a two-year trading range within a long term uptrend. It has been trading in a range between the price levels of $44.00 and just under its all-time high of $61.32.

Delta’s stock took a devastating turn for investors, pulling back over 25% shortly after ticking to its all-time high in the fourth quarter of 2018, going from the upper end of its range all the way back down to the lower end.

Delta found some hope in the first quarter of 2019 after positive earnings and followed with better than expected guidance. The stock rallied over 12% before finding some resistance at the 100-day Moving Average. On April 2nd, Delta released that revenue per seat mile (RASM), an important metric for airlines, grew 2% in the first quarter of 2018. As a result, this helped bump their earnings guidance, which sent the stock gapping up 4%, ripping right through its 200-day Moving Average.

Above is the longer term weekly chart for Delta’s stock. In the first quarter of 2018, the stock broke above its three-year downtrend and reclaimed the 100 and 200-week Moving Averages. The stock proceeded to go on a tear, rallying over 350% from 2013. The stock has found long term support at the 200-week Moving Average and it has remained in an uptrend since.

(Chart above courtesy of ​​)

Based on a survey of 12 analysts offering 12-month price targets, the average price target for Delta’s stock is $64.36. According to that number, the stock is priced at a discount relative to Wall Street’s analysts and could be considered undervalued around current levels near $57.00.

Delta also announced this month that they will be adding flights across the Pacific in a partnership with Korean Air. Clearly, Delta has had some great tailwinds that have helped lead its stock higher. As of right now, the skies seem clear for Delta shareholders.



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